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Bond Sale Called Off by Fannie Mae After SVP Collapse

Fannie Mae has reportedly postponed the sale of more than $500 million in mortgage bonds, on the heels of Friday’s collapse of Silicon Valley Bank.

Bloomberg Law reported that Fannie Mae alerted its investors early Monday that a $542 million credit risk transfer security would be delayed and cited volatile market conditions as the reason for the postponement.

Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation on March 10, 2023, and the Federal Deposit Insurance Corporation (FDIC) was appointed receiver. As of December 31, 2022, Silicon Valley Bank had a reported approximate $209 billion in total assets, and nearly $175.4 billion in total deposits.

Fannie Mae partners with private sources of capital to transfer mortgage credit risk, develop broad and liquid markets, and reduce taxpayer risk, thus facilitating a flow of private capital between Fannie Mae's lender customers and investors. Fannie Mae has reported approximately $2.95 trillion in total unpaid principal balance of mortgage loans that have been partially covered by Single-Family CRT vehicles at issuance as of Q4 of 2022.

Earlier this month, Fannie Mae executed its first Credit Insurance Risk Transfer (CIRT) transaction of 2023–CIRT 2023-1–transferring $407.5 million of mortgage credit risk to private insurers and reinsurers.

The covered loan pool for CIRT 2023-1 consists of approximately 35,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $11.8 billion. The covered pool includes collateral with loan-to-value (LTV) ratios of 60.01% to 80.00% acquired in January 2022. The loans included in this transaction are fixed-rate, generally 30-year term, fully amortizing mortgages and were underwritten using rigorous credit standards and enhanced risk controls.

This is a developing story, with additional details to follow as news breaks.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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